================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
AMENDMENT #4
SEC FILE #: 333-127389
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ZANDARIA VENTURES INC
---------------------------
(Name of small business issuer in its charter)
NEVADA 1000 Applied For
- --------------------- ------------------- ----------------------------------
State or jurisdiction Primary Standard I.R.S. Employer Identification No.
of incorporation Industrial
or organization Classification Code Number
Zandaria Ventures Inc.
535 Thurlow Street, Suite 600
Vancouver, B.C. V6E 3C2
Telephone: 1-888-255-0076
Facsimile: 1-888-255-0076
--------------------------------------------------------------
(Address and telephone number of principal executive offices)
Empire Stock Transfer Inc.
7251 West Lake Mead Blvd Suite 300
Las Vegas, NV 89128
Telephone: 702-562-4091
Facsimile: 702-562-4081
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of
proposed sale to the public: as soon as practicable after the effective date
of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. | X |
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. | |
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
TITLE OF EACH CLASS OF DOLLAR AMOUNT TO BE PROPOSED MAXIUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE (2)
REGISTERED SHARE (1) PRICE (2)
- ------------------------ ---------------------- ---------------------- ---------------------- ---------------------
Common Stock $52,500 $0.01 $52,500 $6.18
- ------------------------ ---------------------- ---------------------- ---------------------- ---------------------
(1) Based on the last sales price on March 22, 2004.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
SUBJECT TO COMPLETION, Dated March 13, 2006
PROSPECTUS
ZANDARIA VENTURES INC.
5,250,000 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
----------------
The purchase of the securities offered through this prospectus involves a
high degree of risk. SEE SECTION ENTITLED "RISK FACTORS" ON PAGES 6-10
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
----------------
The Date Of This Prospectus Is: March 13, 2006
Table Of Contents
Page
<c>
Summary 5
Risk Factors 6
- If we do not obtain additional financing, our business will fail 6
- Because we have not commenced business operations, we face a high risk of
business failure 6
- If we are unable to make the $17,500 payment to complete the acquisition of the
Chip claims by April 5, 2006, we will lose our interest in the property and
our business will fail 6
- Because of the speculative nature of exploration of mining properties, there
is substantial risk that our business will fail 7
- We need to continue as a going concern if our business is to succeed. Our
independent auditor has raised doubt about our ability to continue as
a going concern 7
- - Because we only have mineral exploration rights to the Chip claims, the
landowner may be able to prevent us from conducting exploration on the claims. 7
- Because of the inherent dangers involved in mineral exploration, there is a
risk that we may incur liability or damages as we conduct our business 7
- Even if we discover commercial reserves of precious metals on the Chip
claims, we may not be able to successfully obtain commercial production 7
- Because the Chip mineral claims have not been examined by any professional
geologist or mining engineer retained by us, there is a greater risk that our
property may not contain economic mineralization 8
- Because our president has other business interests, he may not be able or
willing to devote a sufficient amount of time to our business operations,
causing our business to fail 8
- Because we do not have any employees other than our president, we will be
dependent on our management and independent contractors to carry out our
business plan 8
- Because our sole director has no technical experience in mineral exploration, our
business has a high risk of failure 8
- If a market for our common stock does not develop, shareholders may be
unable to sell their shares 8
- A purchaser is purchasing penny stock which limits the ability to sell stock 8
Use of Proceeds 9
Determination of Offering Price 9
Dilution 9
Selling Securityholders 9
Plan of Distribution 11
Legal Proceedings 12
Directors, Executive Officers, Promoters and Control Persons 12
Security Ownership of Certain Beneficial Owners and Management 14
Description of Securities 14
Interest of Named Experts and Counsel 15
Disclosure of Commission Position of Indemnification for Securities Act Liabilities 15
Organization Within Last Five Years 15
Description of Business 15
Plan of Operations 20
Description of Property 21
Certain Relationships and Related Transactions 21
Market for Common Equity and Related Stockholder Matters 21
Executive Compensation 22
Financial Statements 23
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 40
4
Summary
Prospective investors are urged to read this prospectus in its entirety.
We intend to be in the business of mineral property exploration. To date, we
have not conducted any exploration on our sole mineral property interest, the
Chip mineral claims located near Goldbridge, British Columbia. We acquired a
100% interest, subject to a 2.5% net smelter royalty and a 7.5% gross rock
royalty, in the Chip claims from Richard Simpson of Vancouver, British Columbia.
We paid $2,500 upon the execution of the agreement and must pay him an
additional $17,500 by April 5, 2006 in order to complete the acquisition. We do
not currently have the cash on hand to complete the acquisition and have no
guarantee that we will be able to raise the funds to make the required payment.
We anticipate that our total expenditures over the next 12 months will be
approximately $57,600. Accordingly, we will need to raise additional funds over
this period to continue operations.
Our objective is to conduct mineral exploration activities on the Chip claims in
order to assess whether it possesses economic reserves of gold, silver and
copper. An economic reserve is a specific body of rock that can be economically
mined. We have not yet identified any economic mineralization on the Chip
claims, that is, minerals in sufficient quantities such that extracting them
from the ground would be profitable. Our proposed exploration program is
designed to search for an economic mineralization. Because we have not received
any revenue from operations, our auditor has indicated that there is substantial
doubt about our ability to continue as a going concern.
We were incorporated on February 23, 2005, under the laws of the state of
Nevada. Our principal offices are located at 535 Thurlow Street, Suite 600,
Vancouver, British Columbia, V6E 3C2. Our telephone number is 1-888-255-0076.
The Offering:
Securities Being Offered Up to 5,250,000 shares of common stock.
Offering Price The selling shareholders will sell our shares at
$0.01 per share until our shares are quoted on the
OTC Bulletin Board, and thereafter at prevailing
market prices or privately negotiated prices. We
determined this offering price based upon the price
of the last sale of our common stock to investors.
Terms of the Offering The selling shareholders will determine when and how
they will sell the common stock offered in this
prospectus.
Termination of the
Offering The offering will conclude when all of the 5,250,000
shares of common stock have been sold, the shares
no longer need to be registered to be sold or we
decide to terminate the registration of the shares.
Securities Issued and
to be Issued 7,750,000 shares of our common stock are issued
and outstanding as of the date of this prospectus.
All of the common stock to be sold under this
prospectus will be sold by existing shareholders.
Use of Proceeds We will not receive any proceeds from the sale of the
common stock by the selling shareholders.
5
Summary Financial Information
Balance Sheet
December 31, 2005
(unaudited)
Cash $6,392
Total Assets $28,192
Liabilities $17,500
Total Stockholders' Equity $10,692
Statement of Operations
From Incorporation on
February 23, 2005 to December 31, 2005
Revenue $ 0
Net Loss and Deficit ($9,408)
Our fiscal year end is March 31.
Risk Factors
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete all intended
exploration of the Chip claims, and therefore we will need to obtain additional
financing in order to complete our business plan. We currently do not have any
operations and we have no income. As well, we will not receive any funds from
this registration.
Our business plan calls for significant expenses in connection with the
exploration of the Chip claims. While we have sufficient funds to commence the
recommended phase one exploration program on the claims, which is estimated to
cost $8,600, we will need additional funds to complete the phase one program
and to conduct the recommended the phase two program, which is estimated in
total to cost $34,000. Even after completing these phases of exploration, we
will not know if we have a commercially viable mineral deposit.
We will require additional financing to sustain our business operations if we
are not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and may not be able to find such
financing if required.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We have not yet commenced exploration on the Chip claims. Accordingly, we have
no way to evaluate the likelihood that our business will be successful. We were
incorporated on February 23, 2005 and to date have been involved primarily in
organizational activities and the acquisition of the Chip claims. We have not
earned any revenues as of the date of this prospectus. Potential investors
should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to
exploration, and additional costs and expenses that may exceed current
estimates.
6
Prior to completion of our exploration stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from development of the Chip claims
and the production of minerals from the claim, we will not be able to earn
profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail.
IF WE ARE UNABLE TO MAKE THE $17,500 PAYMENT TO COMPLETE THE ACQUISITION
OF THE CHIP CLAIMS BY APRIL 5, 2006, WE WILL LOSE OUR INTEREST IN THE PROPERTY
AND OUR BUSINESS WILL FAIL.
Upon the execution of the agreement to acquire the Chip mineral claims, we paid
the vendor $2,500. In order to complete the purchase, we must pay him an
additional $17,500 by April 5, 2006. We do not currently have the cash on hand
to complete the acquisition and have no guarantee that we will be able to raise
the funds to make the required payment. If we are unable to make the payment by
the deadline date, we will lose our interest in the Chip mineral claims and our
business will fail.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. The
likelihood of our mineral claim containing economic mineralization or reserves
of gold, silver and copper is extremely remote. Exploration for minerals is a
speculative venture necessarily involving substantial risk. In all
probability, the Chip claims does not contain any reserves and funds that we
spend on exploration will be lost. As well, problems such as unusual or
unexpected formations and other conditions are involved in mineral exploration
and often result in unsuccessful exploration efforts. In such a case, we would
be unable to complete our business plan.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
OUR INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
The report of our independent accountant to our audited financial statements for
the period ended March 31, 2005 indicates that there are a number of factors
that raise substantial doubt about our ability to continue as a going concern.
Our continuation is dependent upon our ability to generate profitable operations
in the future and/or to obtain necessary financing to meet our obligations and
repay our liabilities arising from normal business operations when they become
due. If we are not able to continue as a going concern, it is likely investors
will lose all of their investment.
BECAUSE WE ONLY HAVE MINERAL EXPLORATION RIGHTS TO THE CHIP CLAIMS, THE
LANDOWNER MAY BE ABLE TO PREVENT US FROM CONDUCTING EXPLORATION ON THE CLAIMS.
We hold the exclusive right to explore the Chip mineral claims for
mineralization and to remove minerals from the property. However, our rights are
subject to those held by the fee simple property owner, the government of
British Columbia, to make use of the land. If the government decides to develop,
sell or make any other use of the land, our right to explore the property could
be impacted. As a result, we would not be able to continue exploration on the
property and we would be forced to abandon our business plan.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect on
our financial position.
EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON THE CHIP CLAIMS,
WE MAY NOT BE ABLE TO SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION.
The Chip claims do not contain any known bodies of mineralization. If our
exploration programs are successful in establishing gold, silver and
copper of commercial tonnage and grade, we will require additional funds in
order to place the Chip claims into commercial production. We may not be able to
obtain such financing.
BECAUSE THE CHIP MINERAL CLAIMS HAVE NOT BEEN EXAMINED BY ANY PROFESSIONAL
GEOLOGIST OR MINING ENGINEER RETAINED BY US, THERE IS A GREATER RISK THAT OUR
PROPERTY MAY NOT CONTAIN ECONOMIC MINERALIZATION.
In connection with our acquisition of the Chip mineral claims, we retained Mr.
George E. Nicholson, a professional geologist, to prepare a report on the
property. However, Mr. Nicholson's report was based on his review of past
exploration data respecting the Chip mineral claims. Because we have not
retained a geologist to examine our mineral claims in person, there is a greater
risk that our property may not contain economic mineralization.
BECAUSE OUR PRESIDENT HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.
Our president, Mr. Steven Cozine, intends to devote approximately 30% of his
business time providing his services to us. While Mr. Cozine presently possesses
adequate time to attend to our interests, it is possible that the demands on Mr.
Cozine from his other obligations could increase with the result that he would
no longer be able to devote sufficient time to the management of our business.
BECAUSE WE DO NOT HAVE ANY EMPLOYEES OTHER THAN OUR PRESIDENT, WE WILL BE
DEPENDENT ON OUR MANAGEMENT AND INDEPENDENT CONTRACTORS TO CARRY OUT OUR
BUSINESS PLAN.
We do not have any employees other than our president, Steven Cozine. To carry
out our business plan, we will have to retain independent contractors to conduct
exploration work on the Chip claims. If we are unable to retain personnel when
needed, our ability to conduct exploration may be delayed.
BECAUSE OUR SOLE DIRECTOR HAS NO TECHNICAL EXPERIENCE IN MINERAL EXPLORATION,
OUR BUSINESS HAS A HIGHER RISK OF FAILURE.
Our sole director has no technical training in the field of geology and
specifically in the areas of exploring for, starting and operating a mine. As a
result, we may not be able to recognize and take advantage of potential
acquisition and exploration opportunities in the sector without the aid of
qualified geological consultants. As well, with no direct training or
experience, our management may not be fully aware of the specific requirements
related to working in this industry. His decisions and choices may not be well
thought out and our operations, earnings and ultimate financial success may
suffer irreparable harm as a result.
7
BECAUSE WE CANNOT HOLD TITLE TO THE WANAPITEI RIVER PROPERTY UNTIL WE REGISTER
AS A CORPORATION IN BRITISH COLUMBIA, WE MAY INCUR SIGNIFICANT LEGAL EXPENSES IN
ENFORCING OUR INTEREST IN THE CLAIMS.
Before we can hold title to the Chip property in our name, we must register as
an extra-provincial corporation in British Columbia and apply for a free miner's
certificate. We intend to complete this registration process following
completion of the second phase of recommended exploration on the property.
In the meantime, if Steven Cozine, our president and the current registered
holder of the claims, who holds them in trust for us, becomes bankrupt or
transfers the claims to a third party, we may incur significant legal expenses
in enforcing our interest in the claims in British Columbia courts.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and no certainty that a market
will develop. We currently plan to apply for listing of our common stock on the
over the counter bulletin board upon the effectiveness of the registration
statement, of which this prospectus forms a part. Our shares may never trade on
the bulletin board. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
BECAUSE WE INTEND TO FINANCE OUR FUTURE OPERATIONS THROUGH THE SALE OF
ADDITIONAL SHARES OF COMMON STOCK IN OUR CAPITAL, SHAREHOLDERS WILL SUFFER
DILUTION, LIKELY RESULTING IN A LOSS OF INVESTMENT VALUE.
In order to complete anticipated exploration on the Chip property, we will need
to raise additional capital. The most likely source of future funds will be
through the sale of equity capital. Any sale of share capital will result in
dilution to existing shareholders. Such dilution will likely have a negative
impact on the value of our stock.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, thus limiting investment liquidity. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in our company will be subject to rules 15g-1 through 15g-10 of the
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
Please refer to the "Plan of Distribution" section for a more detailed
discussion of penny stock and related broker-dealer restrictions.
Forward-Looking Statements
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the "Risk Factors" section and elsewhere in this prospectus.
Use Of Proceeds
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
Determination Of Offering Price
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price, based
upon the price of the last sale of our common stock to investors.
Dilution
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
8
Selling Securityholders
The selling shareholders named in this prospectus are offering all of the
5,250,000 shares of common stock offered through this prospectus. These shares
were acquired from us in private placements that were exempt from registration
under Regulation S of the Securities Act of 1933 and pursuant to a mineral Chip
claims purchase agreement. The shares include the following:
1. 700,000 shares of our common stock at a price of $0.003 per share that
the selling shareholders acquired from us in an offering that was
exempt from registration under Regulation S of the Securities Act of
1933 and was completed on March 3, 2005;
2. 4,000,000 shares of our common stock at a price of $0.025 per share
that the selling shareholders acquired from us in an offering that
was exempt from registration under Regulation S of the Securities Act
of 1933 and was completed on March 11, 2005;
3. 550,000 shares of our common stock at a price of $0.01 per share that
the selling shareholders acquired from us in an offering that was
exempt from registration under Regulation S of the Securities Act of
1933 and was completed on March 22, 2005;
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon completion
of the offering; and
4. the percentage owned by each upon completion of the offering.
Total Number of
Shares to be Total Shares Percent Owned
Shares Owned Offered for Owned Upon Upon Completion
Prior to this Selling Completion of of this Offering
Offering Shareholders this Offering
Name of Selling Stockholder Account
- ---------------------------------------- ------------------ ------------------ ----------------- ------------------
Edward Johnson 350,000 350,000 Nil Nil
#146 - 2998 Robson Drive
Coquitlam, BC
Chester L. Johnson 350,000 350,000 Nil Nil
3817 Dejong Crescent
Terrace, BC
Nicky Johnson 200,000 200,000 Nil Nil
#146 - 2998 Robson Drive
Coquitlam, BC
Robert Martz 200,000 200,000 Nil Nil
3200 Capstan Crescent
Coquitlam, BC
V3C 4E3
Ronald Newsham 200,000 200,000 Nil Nil
102 - 1048 King Albert Ave.
Coquitlam, BC
V3J 1X5
Scott Young 200,000 200,000 Nil Nil
35847 Sundew Place
Abbotsford, BC
Robert Ferguson 200,000 200,000 Nil Nil
904 - 850 Burrard St.
Vancouver, BC
V6Z 2J1
Guy l. Prevost 200,000 200,000 Nil Nil
967 - Guy Place
Victoria, BC
V8Y 1H1
</table>
9
<table>
<caption>
<s> <c> <c> <c> <c>
Harold Male 200,000 200,000 Nil Nil
#1803 - 1050 Burrard St.
Vancouver, BC
V6Z 2S3
Andrew Male 200,000 200,000 Nil Nil
#1507 - 1050 Burrard St.
Vancouver, BC
V6Z 2S3
Richard Calderbank 200,000 200,000 Nil Nil
8080 - 19th Avenue
Burnaby, BC
V3N 1G3
Nicholas J. Quarmby 200,000 200,000 Nil Nil
# 810 - 688 W. Hastings St.
Vancouver, BC
Peggy Hawkins 200,000 200,000 Nil Nil
8080 - 19th Avenue
Burnaby, BC
V3M 1G3
Peter Kwong 200,000 200,000 Nil Nil
305 - 6th Avenue
New Westminster, BC
Ian Nye 200,000 200,000 Nil Nil
701 - 1460 Barclay St.
Vancouver, BC
V6G 1J5
Ralph Mikaelsen 200,000 200,000 Nil Nil
2764 Cultus Court
Coquitlam, BC
V3C 5A8
John Karlson 200,000 200,000 Nil Nil
9938 Swordfishway
Youbou, BC
V0R 3E0
Giovanni Boso 200,000 200,000 Nil Nil
#516 0 22 E. Cordova
Vancouver, BC
V6A 4G8
Julian Price 200,000 200,000 Nil Nil
212 - 316 E 1st Avenue
Vancouver, BC
V5T 4R6
Joanne Kim 200,000 200,000 Nil Nil
6250 Blenheim St.
Vancouver, BC
V6N 1R4
Edmund Rajan 200,000 200,000 Nil Nil
2236 Monashee Court
Coquitlam, BC
V3K 6P7
Dianne Smirl 55,000 55,000 Nil Nil
7006 Brewster Drive E.
Delta BC
Maria Del Rossario Luna Garcia 55,000 55,000 Nil Nil
#1450 - 1511 Chesnut St.
Vancouver, BC
V6S 3K3
</table>
10
<table>
<caption>
<s> <c> <c> <c> <c>
Michael Ilic 55,000 55,000 Nil Nil
#501 - 460 Westview St.
Coquitlam, BC
Andrew Walker 55,000 55,000 Nil Nil
201 - 1168 Hamilton St.
Vancouver, BC
V6B 2S2
Michelle Gahagan 55,000 55,000 Nil Nil
201 - 1168 Hamilton St.
Vancouver, BC
V6B 2S2
Timothy Hedgecock 200,000 200,000 Nil Nil
168 - 1027 Davie St.
Vancouver, BC
V6E 4L2
Reuben Friesen 55,000 55,000 Nil Nil
4220 - 89 St.
Edmonton, AB
T6E 0L5
Shelly Friesen 55,000 55,000 Nil Nil
4220 - 89 St.
Edmonton, AB
T6E 0L5
Karl Nordquist 55,000 55,000 Nil Nil
1233 Nanton St.
Vancouver, BC
Rayne Holloway 55,000 55,000 Nil Nil
12902 Carluke Cresecnt
Surrey, BC
V3V 6R4
Anik Gaudreau 55,000 55,000 Nil
2010 - 1255 Bidwell St.
Vancouver, BC
V6G 2K8
Each of the above shareholders beneficially owns and has sole voting and
investment over all shares or rights to the shares registered in his or her
name. The numbers in this table assume that none of the selling shareholders
sells shares of common stock not being offered in this prospectus or purchases
additional shares of common stock, and assumes that all shares offered are sold.
The percentages are based on 7,750,000 shares of common stock outstanding on the
date of this prospectus.
None of the selling shareholders:
(1) has had a material relationship with us other than as a shareholder at
any time within the past three years;
(2) has ever been one of our officers or directors; or
(3) is a broker-dealer or affiliate of a broker dealer.
Plan Of Distribution
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions.
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price
arbitrarily based upon the price of the last sale of our common stock to
investors. The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
11
We are bearing all costs relating to the registration of the common stock. These
are estimated to be $9,500. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Exchange Act in the offer and sale of the common stock. In particular,
during such times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may, among other things:
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to time,
as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Exchange Act.
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties;
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance
of the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
* contains such other information and is in such form (including
language, type, size, and format) as the Commission shall require by
rule or regulation;
The broker-dealer also must provide, prior to proceeding with any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* details of the compensation of the broker-dealer and its salesperson
in the transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
* monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
12
Legal Proceedings
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 7251 West Lake Mead Blvd Suite 300 Las Vegas, NV 89128.
Directors, Executive Officers, Promoters And Control Persons
Our executive officer and director and his age as of the date of this prospectus
is as follows:
Directors:
Name of Director Age
- --------------------- -------------
Steven Cozine 41
Executive Officers:
Name of Officer Age Office
- --------------------- ---------------- -----------------------
Steven Cozine 41 President, Secretary, Treasurer and
Chief Executive Officer
Biographical Information
Set forth below is a brief description of the background and business experience
of our executive officer and director for the past five years.
Mr. Steven Cozine has acted as our president, secretary, treasurer, chief
executive officer and as a director since our incorporation on February 23,
2005. He acted as a director of Kelso Technologies Inc., an Alberta and British
Columbia reporting company involved in the design of automobile and train valve
cylinders, from May 1993 to August 1999. He was also a director of Normabec
Mining Resources, an Alberta and British Columbia reporting issuer involved in
mineral property exploration, from September 2001 to January 2003. From 2001 to
present, he has also acted as a business consultant to private and public
corporations in the fields of corporate marketing, public relations and
corporate development. From January 1998 to December 2000, Mr. Cozine was
vice-president of marketing for Saturna Island Vineyards.
Mr. Cozine does not have any professional training or technical credentials in
the exploration, development and operation of mines.
Mr.Cozine intends to devote approximately 30% of his business time to our
affairs.
Certain Relationships And Related Transactions
We sold 2,500,000 shares of our common stock at a price of $0.001 per share to
our president, Steven Cozine, on March 2, 2005 for proceeds of $2,500.
We advanced $1,800 to our president, Steven Cozine, on March 22, 2005. This
amount is unsecured, non-interest bearing and payable within six months from the
advance date. As at March 13, 2006, Mr. Cozine has not repaid this amount.
Otherwise, none of the following parties has, since our date of incorporation,
had any material interest, direct or indirect, in any transaction with us or in
any presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Our sole promoter, Steven Cozine;
* Any member of the immediate family of any of the foregoing persons.
Term of Office
Our sole director is appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our sole officer is appointed by our board of
directors and hold office until removed by the board.
Significant Employees
We have no significant employees other than the officers and directors described
above.
13
Security Ownership Of Certain Beneficial Owners And Management
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Class Name and address beneficial Percent of class
of beneficial owner ownership
- ----------------------- ------------------------------------------------------- ----------------- -----------------
Common stock Steven Cozine 2,500,000 32.26%
Common stock All officers and directors as a group that consists 2,500,000 32.26%
of one person
The percent of class is based on 7,750,000 shares of common stock issued and
outstanding as of the date of this prospectus.
Description Of Securities
General
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
Common Stock
As of March 13, 2006, there were 7,750,000 shares of our common stock issued
and outstanding that are held by 33 stockholders of record.Holders of our common
stock are entitled to one vote for each share on all matters submitted to a
stockholder vote. Holders of common stock do not have cumulative voting rights.
Therefore, holders of a majority of the shares of common stock voting for the
election of directors can elect all of the directors. A vote by the holders of a
majority of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our articles of
incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders of our common stock have no pre-emptive rights, no conversion rights and
there are no redemption provisions applicable to our common stock.
Preferred Stock
We do not have an authorized class of preferred stock.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
14
Options
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
Interests Of Named Experts And Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
Clark Wilson LLP has provided an opinion on the valid issuance of our common
stock.
The financial statements included in this prospectus and the registration
statement have been audited by Cinnamon Jang Willoughby & Company, Chartered
Accountants, to the extent and for the periods set forth in their report
appearing elsewhere in this document and in the registration statement filed
with the SEC, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
Disclosure Of Commission Position Of Indemnification For Securities Act
Liabilities
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. These provisions provide that we shall indemnify a
director or former director against all expenses incurred by him by reason of
him acting in that position. The directors may also cause us to indemnify an
officer, employee or agent in the same fashion.
We have been advised that in the opinion of the Securities and Exchange
Commission indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
Organization Within Last Five Years
We were incorporated on February 23, 2005 under the laws of the state of Nevada.
On that date, Steven Cozine was appointed as our sole director. As well, Mr.
Cozine was appointed as our president, secretary, treasurer and chief executive
officer.
Description Of Business
In General
We intend to commence operations as an exploration stage company. We will be
engaged in the acquisition and exploration of mineral properties with a view to
exploiting any mineral deposits we discover. We own a 100% beneficial interest
in one mineral claim known as the Chip claims. There is no assurance that a
commercially viable mineral deposit exists on the Chip claims. We do not have
any current plans to acquire interests in additional mineral properties, though
we may consider such acquisitions in the future.
15
Mineral property exploration is typically conducted in phases. Each subsequent
phase of exploration work is recommended by a geologist based on the results
from the most recent phase of exploration. We have not yet commenced the initial
phase of exploration on the Chip claims. Once we have completed each phase of
exploration, we will make a decision as to whether or not we proceed with each
successive phase based upon the analysis of the results of that program. Our
director will make this decision based upon the recommendations of the
independent geologist who oversees the program and records the results.
Our plan of operation is to conduct exploration work on the Chip claims in order
to ascertain whether it possesses economic quantities of gold, silver and
copper. There can be no assurance that an economic mineral deposit exists on the
Chip claims until appropriate exploration work is completed.
Even if we complete our proposed exploration programs on the Chip claims and we
are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit.
Chip Claims Purchase Agreement
On April 5, 2005, we entered into a mineral purchase and sale agreement with
Richard SImpson of Vancouver, British Columbia, whereby he sold to us a 100%
undivided right title and interest in three mineral claims, subject to a 2.5%
net smelter royalty and a 7.5% gross rock royalty, located in the Lillooet
Mining Division of British Columbia, Canada. A net smelter royalty is a
percentage of the amount of money that we would receive from the sale of
minerals from the property to a smelter, less refining charges, ore treatment
charges, penalties and transportation costs. The net smelter royalty only
applies to metals. We can purchase 1.5% of the net smelter royalty for
$1,000,000 within 12 months of the commencement of commercial production. We
must pay Mr. Simpson advance annual royalties of $25,000 commencing on April 5,
2008.
A gross rock royalty is a percentage of proceeds we receive from the sale of
rock taken from the property, less treatment costs, transport fees, marketing
costs and taxes. The gross rock royalty applies to the sale of non-metals from
the property such as coal, petroleum products, soil, sand and gravel. There is
no expectation that any of these non-metals will be identified on the Chip
claims, but the vendor of the property has included the gross rock royalty in
the agreement in case any of these products are discovered.
In accordance with the agreement, we paid $2,500 to Mr. Simpson on March 29,
2005. In order to complete our acquisition of the Chip claims, we must pay an
additional $17,500 to Mr. Simpson by April 5, 2006.
Location and Access
The Chip claims are located 15 kilometers south-southwest of the village of
Bralorne in south-western British Columbia. The property is accessed by
helicopter from the town of Pemberton, 25 kilometers to the southwest. Alternate
access to lower elevations of the Chip 2 claim is available via the Noel Creek
forest access road from Bralorne.
The claims are situated on, and about, the divide between the headwaters of Noel
and Ault Creeks within rugged but accessible terrain. Several small lakes and
ponds are found in the north-eastern and south-western portions of the claim
group. Topographic elevations range from 1,676 meters to 2,408 meters.
16
The majority of the Chip property is situated above the treeline. Some slopes
below 1,980 meters near the upper portions of Ault Creek contain locally think
patches of alpine balsam and spruce.
There is no available source of power located on the property. We will need to
use portable generators if we require a power source for exploration of the
property.
Claim Data
The Chip property consists of three mineral claims comprising a total of
1,106.331 hectares. A "mineral claim" refers to a specific section of land over
which a title holder owns rights to explore the ground and subsurface, and
extract minerals The following is a table of pertinent data regarding the
claims:
Claim Name Tenure No. Hectares Expiry Date
Chip 1 510121 491.787 April 3, 2006
Chip 2 510122 307.271 April 3, 2006
Chip 3 510126 307.273 April 3, 2006
These claims have been transferred from the original claim staker, Richard
Simpson, to Steven Cozine, our president, who holds them in trust for us. Mr.
Cozine holds the mineral claims comprising the Chip property in trust for us. It
is a common procedure to have such claims held in trust given the expense that
we would incur in registering as a recorded claim holder and as an
extraprovincial company in British Columbia.
If Mr. Cozine becomes bankrupt or transfers the claims to a third party, we may
incur significant legal expenses in enforcing our interest in the claims in
British Columbia courts.
The registration of the claims in the name of a trustee does not impact a third
party's ability to commence an action against us respecting the Chip property or
to seize the claims after obtaining judgment.
In British Columbia, to extend the expiry date of each claim by one year, annual
assessment work or cash in lieu is required of $0.40 per hectare in years one to
three followed by $0.80 per hectare thereafter. There is also a filing fee of
$0.04 per hectare. In order to retain title to the property, we must conduct at
least $442.53 on the Chip claims by April 3, 2006, thereby extending the expiry
date for an additional year.
The fee simple owner of the real property underlying the claims that comprise
the Chip mineral claims is the government of British Columbia. The government
has the right to sell title to this land to a third party, but is unlikely to do
so given the remote location of the property. We have the right to explore the
claims for mineralization, provided such exploration does not unreasonably
disturb the fee simple owner's use of the land. Because the property is
undeveloped, the British Columbia government's rights to the land are unlikely
to be impacted.
Mineralization
Mineralization on the Chip claims consists of four types:
1. disseminated to semi-massive coarse grained pyrite in silica based
volcanic rocks
- disseminated rock mineralization is small particles of possibly
valuable ore minerals, spread more or less uniformly through the
surrounding rock; this is distinct from massive ore wherein the
valuable minerals occur in almost solid form with very little
waste material included
- pyrite, also known as "fool's gold", is a bright yellow mineral
that is often found in proximity to gold and copper
mineralization
2. coarse, massive pyrite-silica lenses:
- a lens is a body of ore that is thick in the middle and tapers
towards the ends
- pyrite and silica are two minerals that are often found in close
proximity to valuable metals such as gold and copper
3. quartz-sphalerite
- a rock type consisting of a combination of silica and zinc
sulphide.
4. siliceous, pyritic lenses
- the term siliceous refers to a rock that contains an abudance of
quartz
The mineralization is found in widths from a few centimetres to 0.5 meters. The
mineralization in the northeast portion of the claims occurs within a large
gossan with a width of at least 125 meters and traceable for almost two
kilometres. Gossans are rusty colored surface rock which is caused by the
oxidation of pyrite. Since pyrite is often associated with mineral deposits,
gossans can be a guide to discovering them.
17
There is no equipment or other infrastructure facilities located on the Chip
property. As well, the property is free of any mineral workings.
Exploration History
The first record of activity in the area of the now defined Chip claims was in
the mid-1930's when mineralization was first discovered. In 1941, Bralorne Mines
Ltd. completed 1,100 feet of diamond drilling on the claims.
During 1980, Mr. J. Dawson and Mr. K. Daughtry conducted a program of
prospecting, mapping and sampling on the property and further work was
recommended. Prospecting involves analyzing rocks on the property surface with a
view to discovering indications of potential mineralization. Geological mapping
involves plotting previous exploration data relating to a property on a map in
order to determine the best property locations to conduct subsequent exploration
work. Sampling consists of gathering soil samples or pieces of rock from the
property that appear to contain precious metals such as gold and silver, or
industrial metals such as copper. All samples gathered are sent to a laboratory
where they are crushed and analysed for metal content.
In 1983, Placer Development Ltd. completed a program of sampling and geophysical
surveys on the property. Geophysical surveying is the search for mineral
deposits by measuring the physical property of near-surface rocks, and looking
for unusual responses caused by the presence of mineralization. Electrical,
magnetic, gravitational, seismic and radioactive properties are the ones most
commonly measured. Geophysical surveys are applied to gain further information
from the property surface and subsurface to allow better informed opinions
concerning the merit of properties.
In 1986, Geoquest Consulting Ltd. conducted a program of mapping and sampling on
the property and recommended further exploration of the claims.
Geology Report
We retained Mr. George Nicholson, a professional geologist, to prepare a geology
report on the Chip claims. Mr. Nicholson recommends an initial exploration
program on the property consisting of two phases. He bases these recommendations
on previous trace amounts of gold, silver and copper found in rocks and soil in
the eastern area of the property. The first phase would consist of mapping,
prospecting and sampling.
The first phase is estimated to cost $8,600 as described below.
Budget - Phase I
Geologist 4 day @ $400/day $ 1,600
Geotechnician 4 days @ $300/day $ 1,200
Samples 60 samples @ $20 each $ 1,200
Helicopter 2 hours @ $1,400/hour $ 2,100
Camp, Food Supplies $ 500
Truck Rental and Fuel $ 500
Report $ 1,500
Total $ 8,600
The second phase would consist of a blast trenching program. Blast trenching
involves removing surface soil and rock using explosives. Samples are then taken
from the bedrock below and analysed for mineral content. The second phase would
cost approximately $34,000 as outlined below.
18
Budget - Phase II
Blasting Crew 10 days @ $1,000/day $10,000
Camp and Support $ 5,000
Sampling $ 2,500
Helicopter 10 hours @ $1,400/hour $14,000
Report $ 2,500
Total $34,000
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in Canada generally, and in British Columbia specifically.
We will have to sustain the cost of reclamation and environmental mediation for
all exploration and development work undertaken that results in surface
distrubance, such as roads and drill sites. The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the currently planned work
programs. Because there is presently no information on the size, tenor, or
quality of any resource or reserve at this time, it is impossible to assess the
impact of any capital expenditures on earnings or our competitive position in
the event a potentially economic deposit is discovered.
If we enter into production, the cost of complying with permit and regulatory
environment laws will be greater than in the exploration phases because the
impact on the project area is greater. Permits and regulations will control all
aspects of any production program if the project continues to that stage because
of the potential impact on the environment. Examples of regulatory requirements
include:
- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured
and re-vegetated;
- An assessment of all material to be left on the surface will need
to be environmentally benign;
- Ground water will have to be monitored for any potential
contaminants;
- The socio-economic impact of the project will have to be
evaluated and if deemed negative, will have to be re-mediated;
and
- There will have to be an impact report of the work on the local
fauna and flora.
Employees
We have no employees as of the date of this prospectus other than our sole
director.
Research and Development Expenditures
We have not incurred any other research or development expenditures since our
incorporation.
Subsidiaries
We do not have any subsidiaries.
19
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
Reports to Security Holders
Although we are not required to deliver a copy of our annual report to our
security holders, we will voluntarily send a copy of our annual report,
including audited financial statements, to any registered shareholder who
requests it. We will not be a reporting issuer with the Securities and Exchange
Commission until our registration statement on Form SB-2 is declared effective.
We have filed a registration statement on Form SB-2, under the Securities Act of
1933, with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 100 F Street NE, Washington, D.C. 20002. Please call
the Commission at 1-800-SEC-0330 for further information on the operation of the
public reference rooms. The Securities and Exchange Commission also maintains a
web site at http://www.sec.gov that contains reports, proxy statements and
information regarding registrants that file electronically with the Commission.
Our registration statement and the referenced exhibits can also be found on this
site.
Plan Of Operations
Our plan of operation for the next twelve months is to complete the recommended
phase one and two exploration programs on the Chip claims consisting of a
geological mapping, prospecting and geochemical sampling. We anticipate that
these exploration programs will cost approximately $8,600 and $34,000
respectively. To date, we have not commenced exploration on the Chip claims.
We plan to commence the phase one exploration program on the Chip claims in the
spring of 2006. The program should take approximately up to a one month to
complete. We will then undertake the phase two work program during the fall of
2006. This program will take approximately two months to complete. We do not
have any verbal or written agreement regarding the retention of any qualified
engineer or geologist for this exploration program.
As well, we anticipate spending an additional $15,000 on administrative fees,
including fees payable in connection with the filing of this registration
statement and complying with reporting obligations. We will also require an
additional $17,500 in order to exercise the option respecting the Chip property.
Total expenditures over the next 12 months are therefore expected to be $75,100.
While we have enough funds to cover the estimated cost of the phase one
exploration program, we will require additional funding in order to cover
administrative costs, phase two exploration costs and any additional recommended
exploration on the Chip claims following the completion of the phase two
program. Our current cash on hand is sufficient for approximately six months.
We will have to raise additional funds within that time period in order to
effect our plan of operations. We anticipate that additional funding will be
in the form of equity financing from the sale of our common stock or from
director loans. We do not have any arrangements in place for any future equity
financing or loans.
20
Results Of Operations For The Period From Inception Through December 31, 2005
We have not earned any revenues from our incorporation on February 23, 2005 to
December 31, 2005. We do not anticipate earning revenues unless we enter into
commercial production on the Chip claims, which is doubtful. We have not
commenced the exploration stage of our business and can provide no assurance
that we will discover economic mineralization on the Chip claims, or if such
minerals are discovered, that we will enter into commercial production.
We incurred operating expenses in the amount of $9,408 for the period from our
inception on February 23, 2005 to December 31, 2005. These operating expenses
were comprised of organization costs of $500, professional fees of $8,650 and
bank charges of $258.
In the period from our inception on February 23, 2005 to December 31, 2005,
there were no off-balance sheet arrangements.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
believe that there is substantial doubt that we will be able to continue as a
going concern.
Description Of Property
We own the mineral exploration rights relating to the Chip mineral claims. We do
not own any real property interest in the Chip claims or any other property.
Market For Common Equity And Related Stockholder Matters
No Public Market for Common Stock
There is presently no public market for our common stock. We anticipate applying
for trading of our common stock on the over the counter bulletin board upon the
effectiveness of the registration statement of which this prospectus forms a
part. However, we can provide no assurance that our shares will be traded on the
bulletin board or, if traded, that a public market will materialize.
Stockholders of Our Common Shares
As of the date of this registration statement, we have 32 registered
shareholders.
Rule 144 Shares
A total of 2,500,000 shares of our common stock are available for resale to the
public after March 2, 2006 in accordance with the volume and trading limitations
of Rule 144 of the Act. In general, under Rule 144 as currently in effect, a
person who has beneficially owned shares of a company's common stock for at
least one year is entitled to sell within any three month period a number of
shares that does not exceed the greater of:
21
1. 1% of the number of shares of the company's common stock then
outstanding which, in our case, will equal 77,500 shares as of
the date of this prospectus; or
2. the average weekly trading volume of the company's common stock
during the four calendar weeks preceding the filing of a notice
on Form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of
the 2,500,000 shares that may be sold pursuant to Rule 144.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
Dividends
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the
usual course of business; or
2. our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to satisfy the
rights of shareholders who have preferential rights superior to
those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
Executive Compensation
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal period from our inception on February 23, 2005 to December
31, 2005 and the subsequent period to the date of this prospectus.
Annual Compensation
Restr Options/SARS LTP payouts
Other Stock (#) ($)
Name Title Year Salary Bonus Comp. Awarded
- ------------------ ---------- --------- ---------- ----------- ---------- ------------ ------------ ---------------
Steven Cozine Pres, 2005 $0 0 0 0 0 0
Sec,
Treas,
CEO, &
Dir
Stock Option Grants
We have not granted any stock options to the executive officers since our
inception.
22
Consulting Agreements
We do not have any employment or consulting agreement with our directors or
officers. We do not pay Mr. Cozine any amount for acting as a director of the
Company.
Financial Statements
Index to Financial Statements:
1. Report of Independent Registered Public Accounting Firm;
2. Audited financial statements for the period ending March 31, 2005
and unaudited interim financial statements for the period ended
December 31, 2005, including:
a. Balance Sheets;
b. Statements of Operations;
c. Statements of Stockholders' Equity;
d. Statements of Cash Flows; and
e. Notes to Financial Statements
23
Cinnamon Jang Willoughby & Company
Chartered Accountants
A Partnership of Incorporated Professionals
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of Zandaria Ventures Inc. (A Pre-exploration Stage
Corporation):
We have audited the balance sheet of Zandaria Ventures Inc. as at June
30, 2005 and the statements of loss and deficit, stockholders' equity and cash
flows for the three months ended June 30, 2005 and from the date of inception
February 23, 2005 to June 30, 2005. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform an audit to obtain reasonable assurance whether these
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at June 30, 2005 and
the results of its operations and its cash flows for the periods then ended in
conformity with generally accepted accounting principles in the United States.
Theses consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is a pre-exploration stage company and has yet
to achieve profitable operations that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
"Cinnamon Jang Willoughby & Company"
Chartered Accountants
Burnaby, BC
September 18, 2005
MetroTower II - Suite 900 - 4720 Kingsway, Burnaby, BC Canada V5H 4N2.
Telephone: +1 604 435 4317. Fax: +1 604 435 4319.
HLB Cinnamon Jang Willoughby & Company is a member of HLB International.
A world-wide organziation of accounting firms and business advisors.
24
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
BALANCE SHEET
March 31, 2005
ASSETS
Current
Cash $ 15,280
Due from shareholder
1,800
----------------
$ 17,080
================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 300
---------------
STOCKHOLDERS' EQUITY
Capital stock
Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
7,750,000 common shares 7,750
Additional paid in capital 12,350
Deficit accumulated during the pre-exploration stage (3,320)
----------------
16,780
----------------
$ 17,080
================
Nature and Continuance of Operations - Note 1
SEE ACCOMPANYING NOTES
25
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
for the period February 23, 2005 (Date of Incorporation) to March 31, 2005
February 23, 2005
(Date of
Incorporation) to
March 31,
2005
Expenses
Accounting fees $ 300
Bank charges 20
Mineral property cost 2,500
Organization costs 500
-------------------
Net loss for the period $ (3,320)
===================
Basic and diluted loss per share $ 0.00
===================
Weighted average number of shares outstanding 5,627,162
===================
SEE ACCOMPANYING NOTES
26
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF CASH FLOWS
for the period February 23, 2005 (Date of Incorporation) to March 31, 2005
<table>
<caption>
February 23, 2005
(Date of
Incorporation) to
March 31,
2005
<s> <c>
Cash Flows used in Operating Activities
Net loss for the period $ (3,320)
Add item not involving cash:
Adjustments to reconcile net loss to net cash
used by operating activities
Accounts receivable
(1,800)
Accounts payable and accrued liabilities 300
------------------
Cash used in operating activities (4,820)
------------------
Cash Flows from Financing Activities
Issuance of common shares 20,100
Cash from financing activities 20,100
------------------
Increase in cash during the period 15,280
Cash, beginning of the period -
------------------
Cash, end of the period $ 15,280
==================
Supplemental disclosure of cash flow information Cash paid for:
Interest $ -
==================
Income taxes $ -
==================
</table>
SEE ACCOMPANYING NOTES
27
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
for the period February 23, 2005 (Date of Incorporation) to March 31, 2005
<table>
<caption>
Deficit
Accumulated
During the
Additional Pre-exploration
Common Shares Paid-in
-----------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
<s> <c> <c> <c> <c> <c>
Balance, February 23, 2005 - $ - $ - $ - $ -
Capital stock issued for cash
- at $0.001 2,500,000 $ 2,500 - - 2,500
- at $0.003 700,000 700 1,400 - 2,100
- at $0.0025 4,000,000 4,000 6,000 - 10,000
- at $0.01 550,000 550 4,950 - 5,500
Net loss for the period - - - (3,320) (3,320)
--------------- --------------- --------------- --------------- ---------------
Balance, March 31, 2005 7,750,000 $ 7,750 $ 12,350 $ (3,320) $ 16,780
=============== =============== =============== =============== ===============
</table>
SEE ACCOMPANYING NOTES
28
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2005
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on February
23, 2005 and is in the pre-exploration stage. The Company has
acquired a mineral property located in the Province of British
Columbia, Canada and has not yet determined whether this property
contains reserves that are economically recoverable. The
recoverability of amounts from the property will be dependent upon
the discovery of economically recoverable reserves, confirmation
of the Company's interest in the underlying property, the ability
of the Company to obtain necessary financing to satisfy the
expenditure requirements under the property agreement and to
complete the development of the property and upon future
profitable production or proceeds for the sale thereof.
These financial statements have been prepared on a going concern
basis. The Company has accumulated a deficit of $3,320 since
inception, has yet to achieve profitable operations and further
losses are anticipated in the development of its business, raising
substantial doubt about the Company's ability to continue as a
going concern. Its ability to continue as a going concern is
dependent upon the ability of the Company to generate profitable
operations in the future and/or to obtain the necessary financing
to meet its obligations and repay its liabilities arising from
normal business operations when they come due. These financial
statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern. The
Company anticipates that additional funding will be in the form of
equity financing from the sale of common stock. The Company may
also seek to obtain short-term loans from the directors of the
Company. There are no current arrangements in place for equity
funding or short-term loans.
The Company has adopted March 31 as its fiscal year-end.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within the framework of the significant
accounting policies summarized below:
29
<page>
Zandaria Ventures Inc.
(A Pre-exploration Stage Company)
Notes to the Financial Statements
March 31, 2005
- - Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Pre-exploration Stage Company
-----------------------------
The Company complies with Financial Accounting Standard Board
Statement ("FAS") No. 7 and The Securities and Exchange Commission
Exchange Act Guide 7 for its characterization of the Company as
pre-exploration stage.
Mineral Property Costs
----------------------
Costs of lease, acquisition, exploration, carrying and retaining
unproven mineral properties are expensed as incurred.
Financial Instruments
---------------------
The carrying value of cash, accounts payable and accrued
liabilities and due to related party approximates their fair value
because of the short maturity of these instruments. Unless
otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from these financial instruments.
Environmental Costs
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or
the Company's commitments to plan of action based on the then
known facts.
Income Taxes
------------
The Company uses the assets and liability method of accounting for
income taxes pursuant to FAS No. 109 "Accounting for Income
Taxes". Under the assets and liability method of FAS No. 109,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
30
<page>
Zandaria Ventures Inc.
(A Pre-exploration Stage Company)
Notes to the Financial Statements
March 31, 2005
- - Page 3
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Basic and Diluted Loss Per Share
--------------------------------
The Company reports basic loss per share in accordance with the
FAS No. 128, "Earnings Per Share". Basic loss per share is
computed using the weighted average number of shares outstanding
during the period. Diluted loss per share has not been provided as
it would be anti-dilutive.
New Accounting Standards
------------------------
Management does not believe that any recently issued, but not yet
effective, accounting standards if currently adopted could have a
material effect on the accompanying financial statements.
Note 3 Mineral Property
----------------
Pursuant to a mineral property purchase and sale agreement dated
March 29 25, 2005, the Company acquired a 100% interest in the 3
mineral claims near Goldbridge, located in the Province of British
Columbia, Canada for $20,000. $2,500 was paid at the date the
purchase and sale agreement was entered nto, $17,500 is due on or
before April 5, 2006.
Note 4 Capital Stock
-------------
During the period ended March 31, 2005 the Company issued
7,750,000 common shares for cash proceeds of $20,100.
Note 5 Deferred Tax Assets
The significant components of the Company's deferred tax assets
are as follows:
<table>
<caption>
March 31,
2005
<s> <c>
Deferred Tax Assets
Non-capital loss carryforward $ 3,320
Less: valuation allowance for deferred tax asset (3,320)
----------------
$ -
================
</table>
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards that is more
likely than not to be realized from future operations. The company
has chosen to provide an allowance of 100% against all available
income tax loss carryforwards, regardless of their time of expiry.
31
<page>
Zandaria Ventures Inc.
(A Pre-exploration Stage Company)
Notes to the Financial Statements
March 31, 2005
- - Page 4
Note 6 Corporation Income Tax Losses
-----------------------------
At March 31, 2005, the Company has accumulated non-capital losses
totalling $3,320, which are available to reduce taxable income in
future taxation years. These losses will expire beginning in 2025.
Note 7 Related Party Transaction
The amount from a related party is an advance to a director of the
Company on March 22, 2005. This amount is unsecured, non-interest
bearing and payable within six months from the advance date.
32
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
BALANCE SHEET
December 31, 2005
(Unaudited)
<table>
<caption>
ASSETS
<s> <c>
Current
Cash $ 6,392
Due from shareholder 1,800
- ---------------------------------------------------------------------------------------------
8,192
Mineral property (note 3) 20,000
- ---------------------------------------------------------------------------------------------
$ 28.192
- ---------------------------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 17,500
- ---------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock
Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
7,750,000 common shares 7,750
Additional paid in capital 12,350
Deficit accumulated during the pre-exploration stage (9,408)
- ---------------------------------------------------------------------------------------------
10,692
- ---------------------------------------------------------------------------------------------
$ 28,192
- ---------------------------------------------------------------------------------------------
</table>
Nature and Continuance of Operations - Note 1
SEE ACCOMPANYING NOTES.
33
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
Nine and three months ended December 31, 2005
and Period from February 23, 2005 (date of incorporation) to
December 31, 2005
(Unaudited)
<table>
<caption>
Nine months Three months February 23,
Ended Ended 2005
December 31, 2005 December 31, 2005 (date of
incorporation)
to December 31,
2005
--------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Expenses
Professional fees $ 8,650 $ 3,184 $ 8,650
Bank charges 238 20 258
Organization costs - - 500
--------------------------------------------------------------------------------------------------------------
Net loss for the period $ (8,888) $ (3,204) $ (9,408)
--------------------------------------------------------------------------------------------------------------
Basic and diluted
Loss per share $ 0.00 $ 0.00 $ 0.00
==============================================================================================================
Weighted average number of
Shares outstanding 7,750,000 7,750,000 7,498,253
==============================================================================================================
</table>
SEE ACCOMPANYING NOTES.
34
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF CASH FLOWS
Nine months ended December 31, 2005 and
For the period from February 23,
2005 (date of incorporation)
to December 31, 2005
(Unaudited)
<table>
<caption>
Nine months February 23, 2005
Ended (date of
December 31, incorporation) to
2005 December 31,
2005
---------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Cash Flows used in Operating Activities
Net loss for the period $ ( 8,888) $ (9,408)
Add item not involving cash:
Adjustments to reconcile net loss to net
cash used by operating activities
Accounts receivable - (1,800)
Accounts payable and accrued liabilities - -
---------------------------------------------------------------------------------------------------------------
Cash used in operating activities (8,888) 11,208
---------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Acquisition of mineral property - (2,500)
Cash Flows from Investing Activities - (2,500)
---------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Issuance of common shares - 20,100
Cash from financing activities 20,100
---------------------------------------------------------------------------------------------------------------
Increase in cash during the period (8,888) 6,392
Cash, beginning of the period 15,280 -
---------------------------------------------------------------------------------------------------------------
Cash, end of the period $ 6,392 $ 6,392
---------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ -
---------------------------------------------------------------------------------------------------------------
Income taxes $ - $ -
---------------------------------------------------------------------------------------------------------------
Non-cash investing activity (Note 3) $ 17,500 $ 17,500
================= =====================
</table>
SEE ACCOMPANYING NOTES.
35
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from February 23,
2005 (date of incorporation)
to December 31, 2005
(Unaudited)
<table>
<caption>
Deficit
Accumulated
During the
Additional Pre-exploration
Common Shares Paid-in Stage
Number Par Value Capital Total
- ----------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Balance, February 23, 2005 - $ - $ - $ - $ -
Capital stock issued for cash
- at $0.001 2,500,000 $ 2,500 - - 2,500
- at $0.003 700,000 700 1,400 - 2,100
- at $0.0025 4,000,000 4,000 6,000 - 10,000
- at $0.01 550,000 550 4,950 - 5,500
Net loss for the period - - - (820) (820)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2005 7,750,000 $ 7,750 $ 12,350 $ (820) $ 19,280
Net loss for the period - - - (436) (436)
Balance, June 30, 2005 7,750,000 $ 7,750 $ 12,350 $ (1,256) $ 18,844
Net loss for the period - - - (4,948) (4,948)
Balance, September 30, 2005 7,750,000 $ 7,750 $ 12,350 $ (6,204) $ 13,896
Net loss for the period - - - (3,204) (3,204)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005 7,750,000 $ 7,750 $ 12,350 $ (9,408) 10,692
- ----------------------------------------------------------------------------------------------------------------------------
</table>
SEE ACCOMPANYING NOTES.
36
<page>
ZANDARIA VENTURES INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on February
23, 2005 and is in the pre-exploration stage. The Company has
acquired a mineral property located in the Province of British
Columbia, Canada and has not yet determined whether this property
contains reserves that are economically recoverable. The
recoverability of amounts from the property will be dependent upon
the discovery of economically recoverable reserves, confirmation
of the Company's interest in the underlying property, the ability
of the Company to obtain necessary financing to satisfy the
expenditure requirements under the property agreement and to
complete the development of the property and upon future
profitable production or proceeds for the sale thereof.
These financial statements have been prepared on a going concern
basis. The Company has accumulated a deficit of $9,408 since
inception, has yet to achieve profitable operations and further
losses are anticipated in the development of its business, raising
substantial doubt about the Company's ability to continue as a
going concern. Its ability to continue as a going concern is
dependent upon the ability of the Company to generate profitable
operations in the future and/or to obtain the necessary financing
to meet its obligations and repay its liabilities arising from
normal business operations when they come due. These financial
statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern. The
Company anticipates that additional funding will be in the form of
equity financing from the sale of common stock. The Company may
also seek to obtain short-term loans from the directors of the
Company. There are no current arrangements in place for equity
funding or short-term loans.
The Company has adopted March 31 as its fiscal year-end.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within the framework of the significant
accounting policies summarized below:
Pre-exploration Stage Company
-----------------------------
The Company complies with Financial Accounting Standard Board
Statement ("FAS") No. 7 and The Securities and Exchange Commission
Exchange Act Guide 7 for its characterization of the Company as
pre-exploration stage.
37
<page>
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Mineral Property Costs
----------------------
Mineral properties consist of exploration and mining concessions,
options and contracts. Acquisition and leasehold costs and
exploration costs are capitalized and deferred until such time as
the property is put into production or the properties are disposed
of either through sale or abandonment. If put into production, the
costs of acquisition and exploration will be depreciated over the
life of the property, based on estimated economic reserves.
Proceeds received from the sale of any interest in a property will
first be credited against the carrying value of the property, with
any excess included in operations for the period. If a property is
abandoned, the property and deferred exploration costs will be
written off to operations.
Financial Instruments
---------------------
The carrying value of cash, accounts payable and accrued
liabilities and due to related party approximates their fair value
because of the short maturity of these instruments. Unless
otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from these financial instruments.
Environmental Costs
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or
the Company's commitments to plan of action based on the then
known facts.
Income Taxes
------------
The Company uses the assets and liability method of accounting for
income taxes pursuant to FAS No. 109 "Accounting for Income
Taxes". Under the assets and liability method of FAS No. 109,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Basic and Diluted Loss Per Share
--------------------------------
The Company reports basic loss per share in accordance with the
FAS No. 128, "Earnings Per Share". Basic loss per share is
computed using the weighted average number of shares outstanding
during the period. Dilutedvc loss per share has not been provided
as it would be anti-dilutive.
New Accounting Standards
------------------------
Management does not believe that any recently issued, but not yet
effective, accounting standards if currently adopted could have a
material effect on the accompanying financial statements.
38
<page>
Note 3 Mineral Property
----------------
Pursuant to a mineral property purchase and sale agreement dated
April 5, 2005, the Company acquired a 100% interest in the 3
mineral claims near Goldbridge, located in the Province of British
Columbia, Canada for $20,000. Included in accounts payable and
accrued liabilities is a balance of $17,500 relating to the
acquisition of this property
Note 4 Capital Stock
-------------
During the period from February 23, 2005 to December 31, 2005 the
Company issued 7,750,000 common shares for cash proceeds of
$20,100.
Note 5 Deferred Tax Assets
The significant components of the Company's deferred tax assets
are as follows:
<table>
<caption>
December 31, 2005
--------------------------------------------------------------------------------------------
<s> <c>
Deferred Tax Assets
Non-capital loss carryforward $ 9,408
Less: valuation allowance for deferred tax asset (9,408)
--------------------------------------------------------------------------------------------
$ -
--------------------------------------------------------------------------------------------
</table>
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards that is more
likely than not to be realized from future operations. The company
has chosen to provide an allowance of 100% against all available
income tax loss carryforwards, regardless of their time of expiry.
Note 6 Corporation Income Tax Losses
-----------------------------
At December 31, 2005, the Company has accumulated non-capital
losses totalling $9,408, which are available to reduce taxable
income in future taxation years. These losses will expire
beginning in 2025.
Note 7 Related Party Transaction
-------------------------
The amount from a related party is an advance for $1,800 to a
director of the Company on March 22, 2005. This amount is
unsecured, non-interest bearing and payable within six months from
the advance date.
39
<page>
Changes In And Disagreements With Accountants on Accounting and
Financial Disclosure
We have had no changes in or disagreements with our accountants.
Until ______________, all dealers that effect transactions in these securities
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Part II
Information Not Required In The Prospectus
Indemnification Of Directors And Officers
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS") and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the
director has a material conflict of interest;
(2) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was
lawful or no reasonable cause to believe that his or her
conduct was unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by
law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole
discretion, pursuant to the powers vested us under Nevada
law; or
(4) such indemnification is required to be made pursuant to the
bylaws.
40
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
Other Expenses Of Issuance And Distribution
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 6.18
Transfer Agent fees $ 1,000.00
Accounting and auditing fees and expenses $ 3,000.00
Legal fees and expenses $ 4,000.00
Edgar filing fees $ 1,500.00
----------
Total $9,506.18
==========
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage commissions or costs of sale.
Recent Sales Of Unregistered Securities
We completed an offering of 2,500,000 shares of our common stock at a price of
$0.001 per share to our president, Steven Cozine, on March 2, 2005. The total
amount received from this offering was $2,500. These shares were issued pursuant
to Regulation S of the Securities Act.
We completed an offering of 700,000 shares of our common stock at a price of
$0.003 per share to a total of two purchasers on March 3, 2005. The total amount
received from this offering was $2,100. These shares were issued pursuant to
Regulation S of the Securities Act. The purchasers in this offering were as
follows:
41
Name of Subscriber Number of Shares
-------------------------------------- ----------------------------------------
Edward Johnson 350,000
Chester Johnson 350,000
We completed an offering of 4,000,000 shares of our common stock at a price of
$0.0025 per share to a total of 20 purchasers on March 14, 2005. The total
amount received from this offering was $10,000. We completed this offering
pursuant to Regulation S of the Securities Act. The purchasers in this offering
were as follows:
Name of Subscriber Number of Shares
------------------------------- ---------------------------------------
Nicky Johnson 200,000
Robert Martz 200,000
Ronald Newsham 200,000
Scott Young 200,000
Robert Fergusen 200,000
Guy Provost 200,000
Harold Male 200,000
Andrew Male 200,000
Richard Calderbank 200,000
Nicholas Quarmby 200,000
Peggy Hawkins 200,000
Peter Kwong 200,000
Ian Nye 200,000
Ralph Mikalesen 200,000
John Karlson 200,000
Giovanni Boso 200,000
Julian Price 200,000
Joanne Kim 200,000
Edmund Rajan 200,000
Timothy Hedgecock 200,000
We completed an offering of 550,000 shares of our common stock at a price of
$0.01 per share to a total of ten purchasers on March 22, 2005. The total amount
received from this offering was $5,500. We completed this offering pursuant to
Regulation S of the Securities Act. The purchasers in this offering were as
follows:
Name of Subscriber Number of Shares
-------------------------------- ---------------------------------
Maria Del Rossario Luna Garcia 55,000
Michael Ilic 55,000
Andrew Walker 55,000
Michelle Gahagan 55,000
Dianne Smirl 55,000
Reuben Friesen 55,000
Shelly Friesen 55,000
Karl Nordquist 55,000
Rayne Holloway 55,000
Anik Gaudreau 55,000
Regulation S Compliance
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates nor any person on behalf of
any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
42
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
Exhibits
Exhibit
Number Description
3.1* Articles of Incorporation
3.2* Bylaws
5.1** Legal opinion of Clark Wilson LLP, with consent to use
10.1* Mineral property agreement dated April 5, 2005
23.1 Consent of Cinnamon Jang Willoughby & Company
23.2 Consent of Clark Wilson LLP
99.1** Claims location map
* filed as an exhibit to our registration statement on Form SB-2 dated August 5,
2005
** filed as an exhibit to our registration statement on Form SB-2 dated
October 21, 2005
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth
in this registration statement; and notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration Statement; and
c. include any additional or changed material information on the plan of
distribution.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the
termination of the offering.
43
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia on March 13, 2006
Zandaria Ventures Inc.
By: /s/ Steven Cozine
------------------------------
Steven Cozine
President, Secretary, Treasurer,
Chief Executive Officer and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Steven Cozine President, Secretary, Treasurer, Chief March 13, 2006
- ------------------ Executive Officer, principal accounting
Steven Cozine officer, principal financial officer and
Director
44